Rents Dropping, Just Not In Bethesda

For a while now, real estate experts have predicted the large amount of new apartment buildings in the D.C. area would mean falling rents.

According to Urban Turf, a recent report from real estate analyst Delta Associates shows Washington area rents are indeed decreasing, just not in Bethesda:

A report out last week analyzing the regional apartment market in the second quarter of 2013 reveals that rents for Class A apartments (large buildings built after 1991, with full amenity packages) in the DC area dropped on an annual basis for the first time since 2009, a clear sign that the supply of new apartments is catching up to demand.

Class A rents fell year-over-year by about a percentage point in the NoMa/H Street area, upper NW and the sub-market that includes Penn Quarter, Logan Circle and Dupont Circle, but the rents drops were more pronounced in Northern Virginia where rents fell almost 5 percent. Rents did not fall everywhere, however. In the Shaw and Columbia Heights sub-market, rents increased 5 percent; in Bethesda, they rose 3.8 percent.

High-rise rents in the North Bethesda/Rockville area (which includes the rapidly redeveloping area around the White Flint Metro) haven’t fallen either.

According to Steven Reilly, senior associate at Delta, average effective rents for Class A high-rise units in the area have increased by 0.6 percent despite a stabilized vacancy rate that has increased from 5.3 percent to 6.1 percent. Average effective rent in Class A low-rise apartments dropped 2.3 percent and the vacancy rate of 4.4 percent went unchanged.

But that above-average vacancy rate and a projected 1,125 units coming in the next three years could mean the North Bethesda market becomes more competitive, Reilly said.

According to Delta, Class A high-rise rents decreased by 1.4 percent in Silver Spring since last year. There are 13 apartment projects in the entitlement process or under construction in the Bethesda Central Business District and at least four other condominium projects in the pipeline.